Friday, December 8, 2017

Look What They Have Done To Gold

According to the Commitments of Traders report, during the week that ended on December 5, 2017, Money Managers (big speculators trading gold futures) totally changed their attitude to gold. Look at the chart below:

As the chart shows, a net long position held in gold futures by Money Managers was reduced by 64 thousand contracts in just one week!

What is more, it was the highest reduction in a net long position in history. Simply put, suddenly the gold traders threw in the towel. In my opinion, it looks like a panic and, as usually, panics create buying opportunities.

The red rectangle points to other sudden and big reductions in net long positions held by Money Managers. Each time there was such a drop the prices of gold were recovering.

Last week this change was the highest in history (the blue circle) so the chances for a short move up are relatively high.

I have not written about gold on this blog for quite a long time but believe me - I was not optimistic about the yellow metal. Now I am getting optimistic, at least in the short term.

1 comment:

  1. The question that needs to be answered is what is the root of why in these past few weeks of COT reports, that historical reductions have occurred within the hedgers long positions, within the bullion banks short positions, and within the gold futures open interest?

    One possibility .....
    "It occurred to me today that this crypto-mania took off about the time that a small group of people identified a structural shortage in the available physical gold supply in London. Despite some stopgap loans and virtual bullion seizures, the shortage remains."

    It shall be very interesting to see how, if at all, this all play's out in 2018.